Colorado Cracks Down|on Patent Trolls

DENVER (CN) – A new Colorado law makes it easier to prosecute patent trolls who use the patent and copyright system to shake down businesses. Twenty-six states have passed similar laws in recent years. Colorado House Bill 1063 targets companies that make groundless claims of patent infringement to intimidate other, typically smaller, businesses into giving them money. State Rep. Dan Pabon, D-Denver, and Sen. David Balmer, R-Arapahoe County, said when they introduced the bill in January that trolls have “turned patent law into an abusive litigation process.” The bill prohibits and penalizes written or electronic communication from one business to another if the offending business falsely states it has already begun to file suit against the other company. Patent trolls have threatened manufacturers, restaurants, and even banks with lawsuits, and offer to avoid litigation for money, ranging from hundreds to thousands of dollars. A troll can also be flagged if it consistently threatens to sue a company for ostensible patent infringement, and demands money, but never follows through with a lawsuit. The bill, which requires patent lawsuits to have a “reasonable basis,” can be enforced only by the attorney general. Violators can be assesses unspecified fines, plus punitive damages of $50,000 or treble damages, including costs and fees. U.S. companies spend billions of dollars a year to defend against fraudulent patent claims. Gov. John Hickenlooper signed the bill into law on June 5.